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Waterstones Let The Fox Into The Chicken Run

21 May 2012

From FutureBook:

Today is a new dawn for UK Booksellling, as its premier retail chain Watersones, effectively handed over its digital if not its future to Amazon. We will read in the press how this is a logical move by Waterstones and is the dawn of a new ebook beginning under its new management, but some will now start to ask whether this is the end of the beginning, or in fact the beginning of the end?

They first started their digital adventure with Sony. Sony themselves were bullish, gave Waterstone’s an exclusive window and spent heavy on advertising. It failed for many reasons; Sony didn’t have the content, the market wasn’t ready, the price wasn’t right, the stores couldn’t or didn’t want to sell digital, the eink devices by themselves were not the answer, etc.

. . . .

We have to ask why they didn’t partner Barnes and Noble, not today but a couple of years ago, when a partnership could have been mutually beneficial.

. . . .

Imagine if they had chosen Kobo before everyone else did?

. . . .

What does Amazon have that Waterstones doesn’t have in the UK? A significant internet store that sells all books (used, rare,new), a growing publishing business, a self publishing business and growing affinity with authors, a customer mail list, demographics and data to die for.

. . . .

People have asked whether Amazon would open up physical stores, it doesn’t have to as long as stores such as Waterstones open their doors and let them in.

Link to the rest at FutureBook

The mindset of traditional publishing and hangers-on and commentators is all wrong.

Everybody in the legacy book business wants to defeat Amazon, even to the point of breaking the law in the most clumsy fashion imaginable. (See the Price-Fix Six)

Let us consider for a moment a scenario in which an asteroid plunges from the heavens and strikes Amazon HQ, causing immediate destruction of everything.

Would the publishing and bookstore world return to its pre-Bezos paradisaical glory?

Of course not. Before the obituaries were written, a dozen baby Amazons would spring up, each with more venture funding than Bezos ever had and a business plan including, “Just like Amazon, only with ______________” in the opening paragraph.

Within a couple of years, a new Amazon would have risen from the competition, quite possibly more aggressive than the original.

The change sweeping through the book world is about technology and the benefits technology can bring to consumers, not about Amazon. Amazon is just the organization that figured out how to use that technology best (not an insignificant accomplishment). When publishers complain about Amazon, they’re really complaining about the internet and etailing and ebooks, none of which is going away.

PG does not know any details of the Waterstones deal with Amazon, but here’s something he would have advised, had Waterstones asked for his help.

In addition to the discount from Amazon’s list price for Kindles that PG assumes any retailer would receive, PG would ask for a percentage of the sales price of ebooks sold through each Kindle account Waterstones originates.

Through its Amazon Associates program, Amazon is already willing to do this for any product it sells , paying between 4% and 8.5% of the sales price for items sold via Associates links (here’s more information). PG would just say, “Give Waterstones the same advertising fee you would give anyone else on sales Waterstones originates when it sells one of your Kindles.”

That way, whenever a Waterstones customer buys an ebook, Waterstones makes money. Instead of a lost sale, it’s new income.

Perhaps this has already been done.

The underlying strategy is to quit spending psychic energy and executive time trying to stop the Amazon tide and begin to figure out how to make money from Amazon. Get serious about understanding what enduring benefits a retail establishment can bring to consumers in a world where anybody can check prices with their smartphone. (PG suggests that bookstore executives not rely too much on the value of recommendations customers will supposedly seek from multi-pierced sales clerks working for minimum wage.)

Amazon, Bookstores, Disruptive Innovation, Non-US, Passive Guy

4 Comments to “Waterstones Let The Fox Into The Chicken Run”

  1. I agree, PG. Why NOT partner with Amazon? All these others the author mentioned–Sony, Kobo, Barnes and Noble–don’t have any of the reach, clout, smarts, and internet savvy of Amazon. Sony and Kobo are trying, and Barnes and Noble too, but you get the sense that they’re all just keeping their heads above water. My books sell in all these places, so I’m rooting for them, but as a company, Amazon makes the most sense and for Waterstones–a bookstore interested in selling books–to ride Amazon’s coat tails is smart business, not some kind of betrayal.

  2. Check out Shatzkin’s blog. If I understand you correctly about you referral model, Shatzkin believes that this arrangement is already in place for kindle ebooks purchased inside a Waterstones.

  3. “The change sweeping through the book world is about technology and the benefits technology can bring to consumers, not about Amazon. Amazon is just the organization that figured out how to use that technology best (not an insignificant accomplishment). When publishers complain about Amazon, they’re really complaining about the internet and etailing and ebooks, none of which is going away.”

    This is what really boggles my mind about the way the Price Fix Six are behaving. They really don’t seem to understand the above. Everything they are doing seems aimed directly at Amazon, as if they truly think that if they can just take Amazon down everything will go back to normal. I almost have to feel sorry for such invincible ignorance. Almost. But I don’t. I can’t help hoping that they stupid themselves out of existence.

  4. Waterstones ‘were’ trying to partner with B&N. I wonder why they changed their minds?

    The guy in charge of Waterstones is an ex indie bookseller. So maybe he has the common sense to see the way the world is changing. He’s not actually tied into the big six mentality.

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